Time Sensitive Notice Regarding a Proposed Settlement Between Certain Settlement Trusts Related to Securitizations Sponsored by

Time Sensitive Notice Regarding a Proposed Settlement Between Certain
Settlement Trusts Related to Securitizations Sponsored by Residential Capital,
LLC, and certain of its subsidiaries, including GMAC Mortgage, LLC and
Residential Funding Company, LLC
PR Newswire
LAKE SUCCESS, New York, Oct. 8, 2012
LAKE SUCCESS, New York, Oct. 8, 2012 /PRNewswire/ --The following statement
is being issued by the RMBS Trustees regarding a Proposed Settlement between
Residential Capital, LLC, et al., and the Settlement Trusts.
TIME SENSITIVE NOTICE REGARDING A PROPOSED SETTLEMENT BETWEEN CERTAIN
SETTLEMENT TRUSTS RELATED TO SECURITIZATIONS SPONSORED BY RESIDENTIAL CAPITAL,
LLC, AND CERTAIN OF ITS SUBSIDIARIES, INCLUDING GMAC MORTGAGE, LLC AND
RESIDENTIAL FUNDING COMPANY, LLC
NOTICE IS HEREBY GIVEN BY:
THE BANK OF NEW YORK MELLON, THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
DEUTSCHE BANK NATIONAL TRUST COMPANY, DEUTSCHE BANK TRUST COMPANY AMERICAS,
U.S. BANK NATIONAL ASSOCIATION AND WELLSFARGO BANK, N.A.
IN THEIR SEVERAL CAPACITIES AS TRUSTEES OR INDENTURE TRUSTEES (COLLECTIVELY,
THE " RMBS TRUSTEES " AND EACH, AN " RMBS TRUSTEE "), TO THE HOLDERS OF
CERTIFICATES, NOTES OR OTHER SECURITIES (THE " CERTIFICATEHOLDERS ") UNDER THE
RESIDENTIAL MORTGAGE-BACKED SECURITIZATION TRUSTS IDENTIFIED IN EXHIBIT A ,
AVAILABLE AT WWW.RESCAPRMBSSETTLEMENT.COM (COLLECTIVELY, THE " SETTLEMENT
TRUSTS " AND EACH A " SETTLEMENT TRUST ").
THIS NOTICE CONTAINS IMPORTANT TIME-SENSITIVE INFORMATION FOR
CERTIFICATEHOLDERS AND OTHER PERSONS POTENTIALLY INTERESTED IN THE SETTLEMENT
TRUSTS. ALL DEPOSITORIES, CUSTODIANS AND OTHER INTERMEDIARIES RECEIVING THIS
NOTICE, AS APPLICABLE, ARE REQUESTED TO EXPEDITE THE RE-TRANSMITTAL TO
CERTIFICATEHOLDERS IN A TIMELY MANNER.
Dated: August 22, 2012 (date on which notice was delivered to registered
Certificateholders)
This notice (the " Notice ") is given to you by the RMBS Trustees under the
Pooling and Servicing Agreements (including Series Supplements and Standard
Terms of Pooling and Servicing Agreements), Indentures and related Servicing
Agreements (collectively, the " Governing Agreements ") governing the
Settlement Trusts. Capitalized terms used but not defined herein shall have
the meanings assigned to them in the Governing Agreements.
I. Background .
As Certificateholders have previously been notified by each RMBS Trustee, on
May 14, 2012, Residential Capital, LLC, and certain of its direct and indirect
subsidiaries (collectively, " ResCap ") filed voluntary petitions under
Chapter11 of the United States Bankruptcy Code (the " Bankruptcy Code ") in
the United States Bankruptcy Court for the Southern District of New York (the
" Court " ) ( In re Residential Capital, LLC , Case No. 12-12020 (MG) and
related cases) (collectively, the " Chapter 11 Cases ").
THIS NOTICE CONCERNS A PROPOSED SETTLEMENT OF CLAIMS OF THE SETTLEMENT TRUSTS
AGAINST RESCAP IN THE CHAPTER 11 CASES. THESE CLAIMS INCLUDE, WITHOUT
LIMITATION, CERTAIN CLAIMS RELATING TO THE ORIGINATION AND SALE BY RESCAP OF
MORTGAGE LOANS AND TO CERTAIN ASPECTS OF RESCAP'S SERVICING OF THOSE MORTGAGE
LOANS. THE PROPOSED SETTLEMENT WOULD, IF APPROVED BY THE COURT AND ACCEPTED
BY THE RMBS TRUSTEE OF A SETTLEMENT TRUST, BIND THAT SETTLEMENT TRUST AND
RELATED CERTIFICATEHOLDERS. ACCORDINGLY, THE PROPOSED SETTLEMENT AND RELATED
COURT APPROVAL PROCEDURES MATERIALLY AFFECT THE INTERESTS OF THE
CERTIFICATEHOLDERS, AND THE RMBS TRUSTEES RESPECTFULLY REQUEST THAT ALL
CERTIFICATEHOLDERS AND OTHER NOTICE RECIPIENTS READ THIS NOTICE AND RELATED
MATERIALS CAREFULLY IN CONSULTATION WITH THEIR LEGAL AND FINANCIAL ADVISORS.
II. The Proposed Settlement.
On May 13, 2012, ResCap entered into separate agreements with two sets of
Certificateholders (collectively, the " Institutional Investors "), each of
which was titled an "RMBS Trust Settlement Agreement" (collectively, the "
Original Proposed RMBS Trust Settlement Agreements "). On August 15, 2012,
the Original Proposed RMBS Trust Settlement Agreements were amended (the "
Amended Proposed RMBS Trust Settlement Agreements ," and together with the
Original Proposed RMBS Trust Settlement Agreements, the " Proposed RMBS Trust
Settlement Agreements "). (Copies of these documents can be obtained as
explained in Part IV below.) The Proposed RMBS Trust Settlement Agreements
seek to, among other things, settle the claims of the Settlement Trusts
concerning ResCap's alleged breaches of representations and warranties in the
Governing Agreements and certain alleged violations of ResCap's servicing
obligations. The Proposed RMBS Trust Settlement Agreements are subject to the
approval of the Court and the settlements set forth therein cannot be offered
to or accepted by the Settlement Trusts until and unless such approval is
granted by the Court (see Part III below).
The Proposed RMBS Trust Settlement Agreements provide that in settlement of
the Proposed Settled Claims (as defined below) against ResCap, each Settlement
Trust that accepts the settlement (an " Accepting Trust ") will be allowed a
general unsecured claim against the estates of certain ResCap entities in the
Chapter 11 Cases. If all Settlement Trusts become Accepting Trusts, such
allowed claims will aggregate $8,700,000,000 (US$8.7 billion), less an
allocation of the allowed claims for the payment of fees and expenses of the
attorneys for the Institutional Investors as set forth in the Proposed RMBS
Trust Settlement Agreements (the " Settlement Claims Allowance "). The
Proposed RMBS Trust Settlement Agreements further provide that each Accepting
Trust shall have the option (the " HoldCo Option "), at any time prior to
confirmation of a chapter 11 plan in the Chapter 11 Cases (a "Plan"), to elect
to receive up to twenty percent of that Accepting Trust's Settlement Claims
Allowance as an allowed general unsecured claim against the estate of
Residential Capital, LLC (" HoldCo "), in lieu of a general unsecured claim
against the estates of certain of its direct and indirect subsidiaries thereby
reducing each Accepting Trust's allowed general unsecured claim against such
estates to the extent each Accepting Trust exercises the HoldCo Option. The
determination of the Settlement Claims Allowance of each Accepting Trust ( i.e
. , each Accepting Trust's share of the aggregate Settlement Claims Allowance
) is subject to an allocation procedure set forth in the Proposed RMBS Trust
Settlement Agreements and all recipients of this Notice are referred to such
agreements for the details of that procedure.
The Proposed RMBS Trust Settlement Agreements allow each related Settlement
Trust to accept or reject the settlement offer independently without affecting
the rights of any other Settlement Trust (including the share of the
Settlement Claims Allowance to which any other Settlement Trust is entitled if
it becomes an Accepting Trust). If approved by the Court, the Proposed RMBS
Trust Settlement Agreements would affect the rights and interests of all
Certificateholders, and their successors-in-interests and assigns, in any
Accepting Trusts. The affected rights and interests will include, among other
things, the release of claims against Rescap on behalf of the RMBS Trustee,
the Accepting Trusts and all Certificateholders in the Accepting Trusts,
arising out of or relating to (i) the origination and sale of mortgages to the
Accepting Trusts, including representations and warranties made with respect
to those mortgages and any mortgage repurchase obligations; (ii) documentation
of the mortgages in the Accepting Trusts, with certain exceptions; (iii)
servicing of the mortgages in the Accepting Trusts, with certain exceptions;
(iv) certain setoff or recoupment under the Governing Agreements against
ResCap; and (v) any loan seller that either sold loans to ResCap or Ally
Financial Inc. that were sold or transferred to the Accepting Trusts
(collectively, the " Proposed Settled Claims ").
The acceptance of the Proposed RMBS Trust Settlement Agreements by an
Accepting Trust would not, at present, entitle such Accepting Trust to receive
any specific amount of money or other consideration, at any specific time, as
a distribution from the ResCap debtor entities' bankruptcy estates. Rather,
the Settlement Claims Allowance would entitle the Accepting Trust to receive
such consideration as is eventually afforded to the claims of general
unsecured creditors in the Chapter 11 Cases that are classified in the same
manner as the claims of the Accepting Trusts. Accordingly, at present,
Certificateholders cannot assume that acceptance by any Settlement Trust of
the related Proposed RMBS Trust Settlement Agreement will result in any
particular recovery with respect to the Settlement Claims Allowance of such
Settlement Trust. Acceptance by any Settlement Trust of the related Proposed
RMBS Trust Settlement Agreement would, however, resolve disputes with ResCap
and other parties in interest to the Chapter 11 Cases as to the amount and
general unsecured claim status of any claims such Settlement Trust may have
with respect to the Proposed Settled Claims.
The RMBS Trustees have jointly engaged Duff & Phelps, LLC as their primary
advisor with respect to their evaluation of the Proposed RMBS Trust Settlement
Agreements and with respect to certain other matters in the Chapter 11 Cases.
Each RMBS Trustee has also engaged independent counsel to advise it with
respect to relevant legal matters affecting the particular Settlement Trusts
that they administer. None of the RMBS Trustees has made a determination, as
of the date of this Notice, as to the reasonableness of, or the advisability
of entering into, the Proposed RMBS Trust Settlement Agreements on behalf of
any Settlement Trust. None of the RMBS Trustees anticipates making its
decision as to whether or not to accept the proposed settlement on behalf of
any Settlement Trust until and unless the proposed settlement has been
approved by the Court (see Part III below). Although the RMBS Trustees are
cooperating with each other in their evaluation of the proposed settlement,
each RMBS Trustee will make its own decision as to whether or not to accept
the proposed settlement on behalf of any Settlement Trust, and for each
Accepting Trust, whether, and in what amount, to elect to exercise the HoldCo
Option, on the basis of information available to that RMBS Trustee at the time
of such decision.
Settlement Trusts that do not accept the Proposed RMBS Trust Settlement
Agreements and do not become Accepting Trusts will be subject to the
procedures of the Bankruptcy Code and the Court (including the scheduling
order for the Chapter 11 Cases entered by the Court) relating to the assertion
and allowance of claims, including, but not limited to, ResCap's right to
object to the claims.
III. ResCap's Motion for Approval of the Proposed RMBS Trust Settlement
Agreements by the Court; The Rights of Certificateholders and Other Parties to
Appear and Object.
The Proposed RMBS Trust Settlement Agreements are agreements between ResCap
and the Institutional Investors and will not become effective or binding as to
any Settlement Trust until and unless both (a) ResCap obtains Court approval
to make the settlement offer to the Settlement Trusts and (b) such Settlement
Trust, acting through its respective RMBS Trustee, accepts the Proposed RMBS
Trust Settlement Agreements. Accordingly, on June 11, 2012, ResCap filed a
motion with the Court seeking Court approval of the Proposed RMBS Trust
Settlement Agreements and of ResCap's offer of the settlement proposed
thereunder to each of the RMBS Trustees on behalf of the Settlement Trusts
(the " Original 9019 Motion "). On August 15, 2012, ResCap filed a Supplement
to the 9019 Motion (together with the Original 9019 Motion, the " 9019 Motion
").
Among other things, the 9019 Motion seeks a finding by the Court that the
settlements proposed under the Proposed RMBS Trust Settlement Agreements are
fair and reasonable to, and in the best interest of, all interested parties,
including but not limited to, ResCap's creditors, the Institutional Investors,
the Certificateholders for each Accepting Trust and each such Accepting Trust,
the RMBS Trustees, and certain other persons, as a compromise of the claims
asserted by each Accepting Trust against ResCap.
On July 31, 2012, the Court entered an order setting forth a schedule of
deadlines and the date of a hearing related to the 9019 Motion and the RMBS
Trustees' acceptance or rejection of the settlement under the Proposed RMBS
Trust Settlement Agreements (the " Order "). Pursuant to the Order, the Court
will commence an evidentiary hearing on the 9019 Motion (the " Hearing ") on
November 5, 2012. If the Court grants the 9019 Motion, the RMBS Trustees
must accept or reject the Proposed RMBS Trust Settlement Agreements on behalf
of any Settlement Trust on or before the later of (a) November 12, 2012 or (b)
five business days after the entry of an order granting the 9019 Motion. The
RMBS Trustees have until the confirmation of a Plan to elect to exercise the
HoldCo Option on behalf of each Accepting Trust.
[NOTE: Dates set forth in this Notice and in the Order may have changed
between the date that this Notice was written and the date of publication or
reading and are subject to subsequent change. Accordingly, Certificateholders
and other persons interested in the Settlement Trusts should refer to the
sources of information described in Part IV below for up-to-date scheduling
information.]
Any Certificateholder or other person potentially having an interest in the
Settlement Trusts may object to the 9019 Motion or any aspect of the Proposed
RMBS TrustSettlement Agreements, may seek discovery regarding the 9019 Motion
or the Proposed RMBS Trust Settlement Agreements, and may participate in the
Hearing. The Court has directed that:
*any objections to the 9019 Motion, along with any supporting expert
reports, must be filed with the Court by October 5, 2012 ;
*the RMBS Trustees' objections or responses to the 9019 Motion, if any,
must be served by October 15, 2012 ; and
*any reply to objections to the 9019 Motion must be filed by October 29,
2012 .
(Further information regarding additional deadlines regarding the 9019 Motion
is contained in the Order which can be obtained as explained in Part IV
below.)
If the Court approves the 9019 Motion and an RMBS Trustee agrees to accept the
settlement under the Proposed RMBS Trust Settlement Agreements on behalf of an
Accepting Trust, all Certificateholders under the Accepting Trust will be
bound by the Proposed RMBS Trust Settlement Agreements and the releases
contained therein, whether or not the Certificateholder appeared in the
Hearing or submitted an objection to the 9019 Motion or the Proposed RMBS
Trust Settlement Agreements. Accordingly, any Certificateholder that has
concerns about or might object to the Proposed RMBS Trust Settlement
Agreements should consider with their legal advisors whether to participate in
the Court proceedings pursuant to any of the means described in the preceding
paragraph. There will likely be no forum other than such Court proceedings in
which a Certificateholder's objection to the Proposed RMBS Trust Settlement
Agreements will be able to be heard. If the Court approves the Proposed RMBS
Trust Settlement Agreements, the decision of the applicable RMBS Trustee to
accept or reject the proposed settlement on behalf of an individual Settlement
Trust, and to exercise the HoldCo Option on behalf of an Accepting Trust, will
be informed by each RMBS Trustee's analysis of the settlement taking into
account interests of all of its respective Certificateholders and will not
necessarily be based on the interests, objections or other position of any
individual Certificateholder.
IV. This Notice is a Summary; Other Sources of Information.
This Notice summarizes the Proposed RMBS Trust Settlement Agreements, the 9019
Motion and the Order and is not a complete statement of those documents, of
relevant law or of relevant legal procedures. The RMBS Trustees do not intend
to send any further notices with respect to the matters addressed herein, and
Certificateholders and other potentially interested persons are urged to
carefully review the Proposed RMBS Trust Settlement Agreements, the 9019
Motion and the Order and other pleadings that have been filed, and that
subsequently may be filed, in the Chapter 11 Cases, and to consult with their
own legal and financial advisors. The Proposed RMBS Trust Settlement
Agreements and other related, material documents, including certain orders
entered by the Court and other information relevant to the Proposed RMBS Trust
Settlement Agreements, are available at http://www.rescaprmbssettlement.com ,
which will be updated each time additional, related, material papers are filed
or orders are entered by the Court. You may also obtain any documents filed
with the Court in the Chapter 11 Cases by logging on to PACER at
https://www.uscourts.gov or by visiting ResCap's claims agent website at
http://www.kccllc.net/rescap . If you have any questions, you may call (866)
241-7538 in the United States, +1(202) 470-4565 outside the United States or
send an email to questions@rescaprmbssettlement.com .
Inquiries regarding the matters set forth in this Notice may be directed to
questions@rescaprmbssettlement.com or, with respect to any particular
Settlement Trust, to the RMBS Trustee for such Settlement Trust using the
"RMBS Trustee Contact Information" for such RMBS Trustee at
http://www.rescaprmbssettlement.com .
V. Other Matters.
Certificateholders and other persons interested in the Settlement Trusts
should not rely on the RMBS Trustees, or on counsel or other advisors retained
by the RMBS Trustees, as their sole source of information.
Please note that the foregoing is not intended and should not be construed as
investment, accounting, financial, legal or tax advice by or on behalf of the
RMBS Trustees, or their directors, officers, affiliates, agents, attorneys or
employees. Each person or entity receiving this Notice should seek the advice
of its own advisers in respect of the matters set forth herein.
Please be further advised that each of the RMBS Trustees reserves all of the
rights, powers, claims and remedies available to it under the Governing
Agreements and applicable law. No delay or forbearance by an RMBS Trustee to
exercise any right or remedy accruing upon the occurrence of a default, or
otherwise under the terms of the Governing Agreements, other documentation
relating thereto or under applicable law, shall impair any such right or
remedy or constitute a waiver thereof or an acquiescence therein.
Each of the RMBS Trustees expressly reserve all rights in respect of each
applicable Governing Agreement, including without limitation its right to
recover in full its fees and costs (including, without limitation, fees and
costs incurred or to be incurred by such RMBS Trustee in performing its
duties, indemnities owing or to become owing to such RMBS Trustee,
compensation for such RMBS Trustee's time spent and reimbursement for fees and
costs of counsel and other agents it employs in performing its duties or to
pursue remedies) and its right, prior to exercising any rights or powers in
connection with any applicable Governing Agreement at the request or direction
of any Certificateholder, to receive security or indemnity satisfactory to it
against all costs, expenses and liabilities which might be incurred in
compliance therewith, and all rights that may be available to it under
applicable law or otherwise.
Please be advised that with respect to any particular inquiry from individual
Certificateholders, an RMBS Trustee may conclude that a specific response to
such inquiry is not consistent with requirements under applicable law and
regulation of equal and full dissemination of information to all
Certificateholders.
THE BANK OF NEW YORK MELLON, THE BANK OF NEW YORK MELLON TRUST COMPANY, N.A.,
DEUTSCHE BANK NATIONAL TRUST COMPANY, DEUTSCHE BANK TRUST COMPANY AMERICAS,
U.S. BANK NATIONAL ASSOCIATION OR WELLSFARGO BANK, N.A., severally, as
trustees or indenture trustees of the Settlement Trusts
Website: http://www.rescaprmbssettlement.com
Contact: GCG, questions@rescaprmbssettlement.com, +1-866-241-7538 in the
United States, +1-202-470-4565 outside the United States